Introduction Of OTHM Level 6 Diploma in Logistics & SCM
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The term strategic direction can be defined as the design which is required to be executed for a company to develop in the direction of its long-term perspective as well as attain its objectives. Strategic direction usually facilitates the possessors as well as the administration might interact with the significance of the worker's work in addition to their contribution in achieving the business goals. Thus one of the main intentions behind conducting this study is to shed light on the topic if strategic plans for the selected company named TopShop in which the major importance will be provided on the purchasing segment of the company.
AC1.1 The role of purchasing in TopShop
TOPSHOP is an English-style brand for ladies' clothing, shoes, and embellishments. It was a division for the Shangri-la Gathering. Buying in terms of business is the coordinated obtaining of labor and products in the interest of the purchasing element. Buying exercises are expected to guarantee that required things are gotten as quickly as possible and at a sensible expense. Purchasing in Topshop plays a very important role and also in every sort of business. Buying in business in case of TopShop is for the most part liable for spending in excess of 50% of the relative multitude of incomes the firm gets as pay from deals. More cash is frequently spent for the acquisition of materials and administrations than for some other cost, and the spending in administrations is quickly expanding. For a company like TopShop that mainly deals into cloth they need to purchase raw materials from various parts of the world where proper form of purchasing plats a very important role (Schiele, 2019). TopShp’s purchasing department plays a very significant function in the supply chain administration and other business decisions. In case of TopShop purchasing is usually accountable for choosing, contractors, bargaining as well as management of long-haul bonds, checking the performance of the contractors as well as placing orders to contractors. As material expenses might show something like 50-60 percent of the expense of products sold, buying essentially influences benefit in TopShop. In addition, modifications in item expense structure, with materials containing the greater part of the expense of merchandise sold, have increased the function of buying in TopShop (Pereira, 2015). Purchasing additionally assist in keeping the TopShop monetarily wealthy. They get labor and products intended to address functional issues while offering the most noteworthy conceivable benefit too. In addition to this purchasing also plays a major role in establishing the TopShop's procurement strategies as well as techniques to facilitate that the company functions with honesty in the business sector. Last but not the least purchasing sustain the functioning of the TopShop moving with an ease as it checks the supply chain and also look after of the complex works too (LIRA, 2011).
AC1.2 The purchasing relationship with the other functions in strategic procurement in TopShop
Buying of TopShop keeps different divisions provided including paper clasps to assembling materials. A useful connection among purchasing and different segments likewise depends on having information and data frameworks set up to effectively and precisely pass on data. Yet, buying must likewise match up exercises with inward business capabilities to comprehend what different division’s need, when they need it and how and when the organization can pay for it. Effective interior buying connections rely upon clear correspondence between buying staff and associates, who depend on the things they buy.Below mentioned are the relationships of purchasing with other departments of TopShop.
- Association among purchasing and sales: The sales group relies upon TopShop's buying division to have the stock set up to satisfy finished deals. TopShop buying thus relies upon companies outreach group to permit sufficient lead time between the time a request is put and the guaranteed satisfaction date.
- Purchasing and Accounts: The connection between TopShop's buying division and accounts segment needs continuous criticism in the both ways. The buying office has to be aware of the potential outcomes and imperatives that your money division handles. These incorporate new wellsprings of capital that make it conceivable to make worthwhile stock buys and income hardships that breaking point buying power.
- Purchasing and Manufacturing: Easy and opportune creation relies of having required parts available. Requesting these segments is the accountability of the buying division. Thus, production supervisors are liable for conveying to buying and supply staff about what they need, with enough lead time for buying to secure without carrying creation to a stop. This successful correspondence relies upon both buying and assembling staff realizing what amount of time it requires to arrange and get various parts and furthermore having clear and current data about what parts are generally basic to have available and which can be requested from different sources assuming that there is an issue with TopShop’s essential provider.
AC1.3 Evaluate the purchasing and product lifecycle and new product development processes in strategic procurement in TopShop
As is known to all that fashion trends are extremely short-lived. In most cases, they do not even last more than 6 months. Furthermore, to that TopShop is a brand that deals with fast fashion, and hence the trend principle of this shop moves in a pretty paced way. On average any garment remains on the shelf for 1-1.5 months, post which if it is not sold then it is outsourced to online shopping platforms like Amazon. After the firm was taken over by ASOS, it started its online venture through which its products were sold. The shelf life of their garments and accessories at the store is not much, however, TopShop is concerned regarding the environmental impact fast fashion has hence the online presence of these products is long and hence they are carefully preserved under good conditions for later sales. TopShop as a fast fashion brand uses a mix of both natural as well as synthetic materials; this elongates the shelf life of the product and hence reduces the massive environmental impact that fast fashion has. However, the firm does not take step towards recycling any of the discarded products after it has exceeded their shelf life (Nie et al., 2017). Apart from that most of the products that are not sold for over 6 months are discarded as well. This process takes place either in landfills or incineration. According to reports, TopShop has no evidence of taking any meaningful action against the reduction of the emission of greenhouse gases, reduction in the use of water in their manufacturing process, or reduction in their carbon footprints. The firm has not been using any sustainable models as well to reduce the negative impact on the environment. Post-purchase an average TopShop product can be used for 507 years based on its maintenance and the rate of product development in this firm is very high and is strategically planned according to market trends. Strategic procurement depends on its list of suppliers; however, the overall report of the purchase cycle of the product from an environmental point of view is not very impressive (Hines and McGowan 2002).
AC 2.1 an explanation of the purchasing decision process in the TopShop business
TopShop is not a luxury brand and hence the target market of this firm is people who wish to purchase casual clothing for daily wear. The firm also sells party wear however most of its revenue and sales are from the casual wear department. The target market of this firm ranges from 15-40 years on a micro level. The purchasing process of this firm is not very unlike most fast fashion brands or shops. TopShop is moderately priced and hence it does not fall in the luxury or the premium category of pricing, this allows the firm to attract and maintain a stable customer base. Furthermore, this firm sells by margin and not value and hence bulk sales are important to them. The firm organizes frequent sales and advertises on special occasions. Furthermore, the firm has over 500 shops all over the UK, and hence it is quite popular among its present and potential customers (Isen 2012). As most fashion firms do, TopShop also replicates various luxury brands and sells them at cheaper rates; this is the primary aspect that attracts purchases in the firm. The present generation that is Gen Z faces a lot of peer pressure to keep up with the latest fashion trends, furthermore, social media also instigates this pressure as a whole. However, TopShop has been in constant competition with Zara and the latter brand has an upper hand in the competition. Customer reviews have claimed that the fittings and shelf life of Zara are much more than that of TopShop and hence this preference arises. However, the customer base of TopShop is pretty strong, the firm ranked in the 63 rd position in the Top 100 Brand Love list in 2020. Hence the purchasing process and the decision-making process of purchase of this fast fashion brand are not very different from its other contemporary. The firm has not been able to gain a competitive advantage in the market in the last 5-7 years and hence it also has faced immense losses.
AC 2.2 An analysis of the sources of purchasing information in strategic procurement in TopShop
According to the marketing analysis report of TopShop, the includes the aspect of uniqueness and differentiation in its products. Furthermore, the product base of the firm is extremely diverse as a whole. The base contains a wide range of accessories as well as apparel, these are further divided into three unique categories that are mainline, boutique, and unique. This it is a major attraction point for customers who wish to opt for unconventional designs and styles. As mentioned, the firm is not a luxury brand and hence its pricing is not from the premium category, this allows the firm to sell by a margin that automatically generates more customers for the firm. TopShop has efficiently adopted the Integrated Marketing Communication (IMC) strategy, this means that the firm allows all kinds of advertising techniques the firm, for example, the firm uses both the traditional and digital forms of marketing, and it is also a big fan of social media marketing and personalized offers for their daily customers. The firm uses a unique type of promotion where they tend to decorate the outer portion of the shop with messages of social awareness. The shop efficiently did this in many instances such as the MeToo movement and the BlackLivesMatter movement as well. The firm is also a firm believer in collaborations, during the inauguration of its store in New York the firm approached top models like Jenifer Lopez and Jay Z to endorse their brand (Serel 2013). The official website of the firm is always updated with the release dates of new products and hence that is also another great source of purchasing information for the buyers. The distribution channels of the firm are mostly retail-based, but the brand has over 500 shops all over the UK, and hence despite having a single distribution channel the firm generates effective and positive attention towards itself that ultimately reflects on its sales and revenue. The aspects of marketing, as well as social awareness together, generate purchase information for the public who are or wish to be potential customers of TopShop. Apart from that word of mouth is another informal mode of transferring purchasing information for the shop. This is unintentional by the existing customers of the brand who are satisfied with the product and services of the brand.
AC 2.3 An evaluation of the operational and strategic supply chain decision process in strategic procurement in business management in TopShop
The strategic procurement and supply chain operation of TopShop works in three distinctive steps:
- Supply and Suppliers: the first aspect is the supplies that are used for making the product and the suppliers who supply them. As mentioned before TopShop is a fast fashion brand and hence it uses a mix of natural and synthetic fibers to make its products. Natural products include cotton, wool, silk, fur, and leather, and synthetic materials include acrylics, polyester, nylon, and so on. All of these materials are procured from different countries in Asia. The factories where these products are manufactured belong to the states of Arcadia and Mauritius. The covid 19 pandemic had heavily affected the entire process of suppliers as well as supplies so much so that the firm had asked for a discount of 30 percent from its suppliers to continue with its processes (Li et al., 2017).
- Manufacturing: the manufacturing process of these products is completed at different manufacturing units in Europe that are close to the United Kingdom. This is one to minimize the shipping charges of bringing the products from the manufacturing units to the retail stores across the UK. The manufacturing process takes about 3-6 months to be completed for a new batch,
- The firm has a total of 508 stores across the United Kingdom and retail is the main source through which the sales are conducted in the firm. The firm has just developed its online presence post its merger with ASOS, the online availability of the firm is still very limited and it is yet to develop an effective marketing plan for the completion of the same hence it mainly depends on the retail aspect of sales. The firm does not have many distribution channels apart from the retail aspect as well.
The merger of the firm with ASOS during the pandemic ignited the idea of an online presence for the firm to survive the given lockdown situation. The supply chain operation of the online sales of TopShop is pretty much similar to that of the retail one. As mentioned, the online store contains the product for much longer than that the retail store. Presently, the firm is planning to increase its online presence for further reach.
AC 3.1 An assessment of the corporate strategies and strategic procurement in strategic procurement in business management
Over the years, ever since 1964 TopShop has employed several corporate strategies that have helped the firm to maintain a good position in the market. The primary strategies of the same will be discussed as follows;
- The Y Quotient: the brand has always been an ardent promoter of innovation and youthfulness. Customers and marketers believe that the brand has undertaken various initiatives to promote this idea. For example, the brand does not manufacture garments or accessories of any dull colors for any age. Other vibrant examples include their initiative to design for the 2002British Fashion Council’s Newgen initiative, which allowed young models as well as designers to showcase their talents on national and international platforms. In 2003 the firm also sponsored Fashion East which promoted young talents from fashion schools to undertake professional projects. Such collaborations made a very organic social position for the brand in the eyes of the customers. The brand also showcased the works of the winners of these competitions for free as the events themselves were non-profit themselves. This allowed the firm worldwide attention, especially from the younger generation that would further on go to become their long-term customers(Dhir 2020)
- Store differentiation and omnichannel: As vividly discussed in the previous sections, the firm has a singular mode of distribution of its products however it follows a unique strategy to keep its customers engaged with the brand even when its online presence is not that strong, in the present times of vividly increasing importance of online presence the firm without any online presence maintains a strong customer engagement through store differentiation. The number of bulk quantities of products manufactured for the firm has already been discussed; however, there are reasons behind this. Each store in the UK has a different collection of apparel in them. Not only is that, apart from the logo and some unignorable interiors, each store designed in an aesthetically different manner which helps the firm to maintain a strong brand image and customer base.
- Marketing through tech: Although the online presence of the firm is a recent add-on in the brand portfolio, the firm has been using social media as an active marketing tool for a long. Apart from the website the firm also gives out regular updates regarding the launch of new collections. Email marketing is another important form of marketing they use where regular customers are individually mailed regarding the latest customized offers and discounts. Marketing is also performed through phone calls and messages (Majumdar and Sinha 2018).
- Use of Pinterest: TopShop was the pioneer of breaking the pattern of the Pin It button. TopShop was the first one to introduce the Pinterest palette where the customers could see all of the pinned products from TopShop.com on one board; the interface would also show the customers similar products for a unique shopping experience as a whole that would generate massive interest for the firm.
AC 3.2 An evaluation of the Total Quality Management (TQM) driven purchasing strategies
The evaluation of the supply chain management system has already been performed in the previous section of the report; this section will focus on the Total Quality Management of the firm. There are five basic principles and components of TQM and this section of the report will evaluate the condition of the firm in all of these aspects:
- Focus on customers: the management of TopShop believes that because the firm does not have a strong online presence it makes them easier to connect with the customers. The management believes that when firms shift to a virtual space of communication, the distance between them and the customer's increases, however the omnichannel they follow in the physical space makes them closer to the customers as a whole. They manage their customers through a direct approach using customized emails, phone calls, messages, and so on.
- Commitment by employees: Unfortunately, the aspect of employee satisfaction at TopShop is exceptionally low. The ratings of the same are only 2.7/5 on various comparing websites (Νιμβρι?της, Γ.Ι., 2019). The employees are heavily dissatisfied due to the low compensation for their work and the overall company culture of the firm which is very restrictive and autocratic. Furthermore, employees are not awarded or rewarded anyhow and that creates a sense of distance from the firm that leads to employee dissatisfaction.
- Improvement: the firm has not been able to move towards continuous improvement for the last few years, this is one of the main reasons why the firm has been acquired by ASOS. The latter has ensured improvement in the quality and performance of the firm through the use of technology, darting new strategies, and rapid digitization as a whole.
- Adherence to process: Many researchers and marketers have claimed that TopShop does not identify or understand the call of the hour. In other words, the firm is unable to recognize the requirements of the present date and the rapidly changing preferences of the customers in terms of both product and service. The firm still follows an age-old omnichannel way of distribution and hence it has not been able to gain a competitive advantage.
- Strategic and systematic approach: the firm has not been able to draft a relevant strategy that will have a systematic approach toward rapid improvement and that is one of the main reasons for the acquisition of the firm. The firm is somewhat claimed to be outdated till a point where it fails to recognize the trends of the market and act accordingly (Turker and Altuntas 2014).
AC 3.3 An analysis of the portfolio driven supply strategies in strategic procurement business management
This section will analyze the strategies that are taken by TopShop to maintain an efficient supply chain:
- Selective suppliers: As mentioned before, the firm has suppliers across Asia, and raw materials are transported to the manufacturing units by them. This strong network of suppliers is very old. Some of them have been working for generations for the firm. This selective mode of choosing suppliers ensures trust and quality of the products that are being supplied to the firm. Development of good relations with the suppliers even the ones that are new in the system have proven to be extremely beneficial for the firm. A very vibrant example of this is when the firm could ask for a 30 percent discount from its suppliers due to the pandemic when the stores were shut and the firm was not able to generate adequate revenue for employee retention and maintenance.
- Segmentation of suppliers: TopShop, being in the garment business for a long knows the material market and is aware of the system. They know which region is the best for which material and the employment of which supplier will cut down the costs for them. They tend to segregate their suppliers in a very similar way (Sen 2008). This allows the firm to receive the best of everything that automatically reflects in the product quality of the firm.
- Supplier experience: treating suppliers like partners and maintaining good relations with them is something that works in its place, however at the end of the day one must not forget all of this is business. The primary aspect of the supplier maintaining relations with the firm is based on the experience it has from the firm, this includes timely payments, regular contact, clear communication, good treatment, and so on. These aspects greatly affect the experience of a supplier in a firm and ultimately lead to an efficient network.
- SRM: A proper approach towards supplier relation management should be the primary focus of a firm so that all of the above-mentioned aspects are kept on track. The procurement process should be met and dealt with by the senior management of the firm. An able and efficient SRM also recognizes the immediate changes that are required in the supplier change. An able SRM takes a very practical approach and is not afraid to change or replace any aspect of the operations or individuals in the system that it deems to be necessary for the overall functioning of the system efficiently and organically (Bruce et al., 2004).
AC 4.1 An explanation of traditional purchasing with the lean, agile, and virtual supply chain in strategic procurement in business management
There are three types of supply chain management systems; that are lean, agile, and virtual supply chain, this section will analyze as to which one of them is used and is the most convenient one for the firm. As mentioned, the firm uses a very traditional form of purchasing that has limited distribution and uses an omnichannel, this section will reveal the kind of supply chain used by the firm and justify its usage
As mentioned before, the firm has not made any noteworthy development regarding the environmental perspective of fast fashion (Henniger et al., 2015). The lean mode of supply chain believes in controlling wastage and hence cutting down production costs. However, the report has already mentioned that the firm uses a store differentiation policy where two stores of the brand hardly keep the same collection. This means massive production and higher maintenance costs. Ultimately when the garment or accessory is not purchased, it is either discarded in landfills or incinerated. This is a massive blow to the environment as well as the overall cost-efficiency aspect of the firm. Hence from the justification and facts mentioned, it is rendered clear that the firm does not use the lean mode of supply chain production or management.
The agile form of supply chain management believes in the actual market demand and does not rely on forecasts. There are three aspects of agile supply chain management; virtual incorporations, strong network connections, and responsive markets. TopShop is a follower and doer of this particular supply chain. It follows the market demand, which means that it only starts the production process when there is a new trend started by the luxury brands; the aspect of virtual incorporations is not very strong in the case of this firm. However, the firm does have a strong chain of connections and hence this is the mode of supply chain management that the firm prefers and uses.
A virtual form of supply chain management is nothing but a virtual representation of the supply chain that is used by the firm to identify any potential gaps or threats to the firm's operations. As the firm has not driven its attention towards the technological aspect of operations, hence this mode of supply chain management is out of the question for the firm as a whole. The virtual mode of supply chain management is however being introduced after the firm's acquisition by ASOS, however, its strong establishment is yet to be implemented by the firm (Thomassay 2010).
AC 4.2 An evaluation of the purchasing in different industries in strategic procurement in business management
This section will provide a comparative analysis of the trends of purchase in different industries, the report has chosen three industries for the analysis, the first is the fast fashion industry, the second is retail industry and the third is the electronics industry.
The fast fashion industry includes brands like Zara, TopShop, H & M, and so on. This industry mostly depends on the trends that are set by the luxury fashion industry, because these brands make cheaper replicas of the luxury brands, and hence the purchasing trend in this industry depends on them (Choi and Cheng 2015).
Retail industries like Unilever, Tesco, and Walmart focus on margin, they tend to keep their prices low so that they can induce bulk purchases from customers. The main aspect on which the purchase from this industry depends is cost efficiency.
For electronic companies like Apple, Samsung, and LG, the aspect of purchase depends on the latest trends that are facilitated by the innovation performed by these firms. Furthermore, reviews and recommendations from peers, the market, and the salespeople also matter in this purchase (Barnes 2006).
So, from the overall discussion, it can be said that purchasing of Top Shop is considered to be as one of the major activities as the other functions of the company is totally dependent on each other. With the help of the study it has also been identified that conventional purchasing of the company is also have a strong relationship with the contemporary purchasing like agile, and virtual supply chain in strategic procurement in business management.
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